July 1, 2010

EUobserver / Ukraine seeks EU help in Russia gas talks

Ukraine seeks EU help in Russia gas talks

ANDREW RETTMAN
29.06.2010 @ 09:29 CET
Ukraine has said the EU should play a role in any merger between its national gas distributor, Naftogaz, and Russia's Gazprom, a deal that could have profound political consequences.

"We are willing to consider it [the Gazprom merger], only if there's both a European and a Russian stake," Ukrainian deputy prime minister Sergei Tigipko said at a business forum in Moscow on Monday (28 June), according to Reuters.

A purely Naftogaz-Gazprom merger "is not in Ukraine's best interest," he added.

Russia first floated the potential deal in April, raising concern for the prospects of integrating Ukraine into EU energy markets and Brussels' offer to help rebuild Naftogaz into a modern, transparent company.

The merger, which would see Naftogaz offer up control of its transit pipeline network to the state-controlled Russian firm, is seen by Ukrainian opposition parties as a threat to the country's independence.

The Naftogaz pipelines, which transit 80 percent of Russian gas to the EU, are a national strategic asset. Control of Naftogaz also allows the Ukrainian government to wield domestic influence by distributing lucrative posts to the country's oligarchs and internal power-brokers.

The Tigipko statement indicates that the new Moscow-friendly administration of Ukrainian President Viktor Yanukovych is willing to stand up to Russian pressure.

Gazprom chief Alexei Miller, speaking after the company's shareholders' meeting on Friday, said the merger is part of Ukraine's destiny.

"This is a historically pre-determined step. The gas transportation systems of Gazprom and Naftogaz constitute a single complex functioning closely with each other," he said.

The Gazprom boss said his side is willing to give Ukraine its own gas reserves worth up to 1 trillion cubic metres out of Russia's overall reserves of over 33 trillion cubic metres. He added that Gazprom is already in talks with banks to finance the deal.

The fresh Naftogaz discussion comes after a gas dispute between Russia and Belarus last week turned nasty when Russia cut off supplies, leading to lower gas deliveries to EU countries Lithuania and Poland.

Some commentators saw the dispute as an attempt by Russia to strongarm Belarus into joining a customs union with Russia and Kazakhstan on Russian terms, in a move that would complicate EU efforts to build closer economic ties with Belarus.
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